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Here’s a link to a youtube video below between Ben Carlson & Mike Piper discussing the topic of Soc Sec going bankrupt. For those who may not recognize the names, Carlson is part of Ritholz Wealth mgt and author of “A Wealth of Common Sense” email blog. Mike Piper is a CPA, author of the “Oblivious Investor” email blog and creator of the Open Social Security calculator (https://opensocialsecurity.com/). Here’s the url to their
The one change we don’t want that they mention is to fill the benefit shortfall of 23% or so with general revenue. SS needs to stay self-funded and out of annual political budget debates and games. Americans need to know and deserve to know that funding is steady and ongoing no matter who is in the White House and Congress.
It was designed that way in 1935 intentionally and it is critical that it stay that way.
SS can’t go bankrupt as long as it has a revenue stream. That stream includes, FICA taxes, interest on bonds and incomes taxes paid on SS benefits by relatively few beneficiaries.
The interest and income tax streams are declining.
The FICA stream is insufficient to cover promised benefits. And, since demographics are not in our favor, the portion of promised benefits covered by FICA will continue to decline.
The coming problem has been clear for decades, every Trustee report has warned Congress and urged action sooner or later.
The problem is simple, the solution is simple and would have been more so ten years ago, but here we are with misinformation flowing on social media (a frequent claim is Congress stole the funds and illegal immigrants are collecting benefits – both nonsense) and with Congress not only not addressing the issue, but making it worse by making some benefits exempt from income taxes.
The income taxes paid on SS benefits are split.
https://www.ssa.gov/oact/progdata/taxbenefits.html#:~:text=Under%20legislation%20enacted%20in%201983,Medicare's%20Hospital%20Insurance%20Trust%20Fund.
Correct.
This was a useful discussion.
Agree. I follow both of these guys so surprised I hadn’t seen it before. Thanks for sharing Ray.